DHS awards $45.4M contract for aircraft depot maintenance and inspection to Lockheed Martin

Contract Overview

Contract Amount: $45,434,605 ($45.4M)

Contractor: Lockheed Martin Integrated Systems, LLC

Awarding Agency: Department of Homeland Security

Start Date: 2006-11-22

End Date: 2015-05-05

Contract Duration: 3,086 days

Daily Burn Rate: $14.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: PHASE DEPOT MAINTENANCE WITH CONCURRENT ENHANCED SPECIAL STRUCTURAL INSPECTION

Place of Performance

Location: GREENVILLE, GREENVILLE County, SOUTH CAROLINA, 29605, UNITED STATES OF AMERICA

State: South Carolina Government Spending

Plain-Language Summary

Department of Homeland Security obligated $45.4 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: PHASE DEPOT MAINTENANCE WITH CONCURRENT ENHANCED SPECIAL STRUCTURAL INSPECTION Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. The contract spans nearly nine years, indicating a long-term need for these services. 3. Services include depot maintenance and structural inspections, critical for operational readiness. 4. The contract type (Time and Materials) can lead to cost overruns if not managed closely. 5. The award was not competed, suggesting potential limitations in market engagement. 6. The geographic focus is South Carolina, indicating a specific operational hub.

Value Assessment

Rating: fair

The contract value of $45.4 million over nearly nine years averages to approximately $5 million annually. Without specific benchmarks for aircraft depot maintenance and enhanced structural inspections for the type of aircraft serviced by CBP, a direct value-for-money assessment is challenging. However, the non-competitive nature of the award and the Time and Materials pricing structure present inherent risks to achieving optimal value. Comparing this to similar long-term, specialized maintenance contracts would be necessary for a more robust evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government did not leverage market dynamics to secure the most cost-effective solution.

Public Impact

U.S. Customs and Border Protection (CBP) aircraft will receive essential maintenance and safety inspections, ensuring operational readiness. The services directly support national security by maintaining critical aviation assets for border surveillance and interdiction. The contract's duration implies a sustained need for these specialized aviation services. Work is primarily located in South Carolina, potentially supporting local aviation maintenance jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Time and Materials contract type carries risk of cost escalation without strict oversight.
Long contract duration (nearly 9 years) requires sustained vigilance to ensure continued value.
Lack of publicly available performance metrics makes it difficult to assess contractor effectiveness.
Specific aircraft types and maintenance requirements are not detailed, hindering independent cost analysis.

Positive Signals

Contract addresses critical operational needs for CBP aviation assets.
Lockheed Martin is a well-established aerospace and defense contractor with extensive experience.
The contract ensures continuity of essential maintenance services for national security operations.
The award specifies a geographic location, potentially benefiting regional economies.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government investment. Contracts for aircraft maintenance and depot services are a substantial segment of this market. Lockheed Martin is a major player in this industry, often securing large, long-term contracts due to its established capabilities and security clearances. This contract fits within the broader landscape of government support for maintaining aging military and law enforcement aviation fleets.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large prime contractor like Lockheed Martin typically means the primary value of the contract flows to the prime. Further analysis would be needed to determine if any small business participation was mandated or occurred organically.

Oversight & Accountability

Oversight for this contract would fall under the Department of Homeland Security's contracting and program management offices. Given the Time and Materials nature, rigorous monitoring of labor hours, material costs, and justification for work performed is crucial. The contract's duration necessitates ongoing performance reviews and potential audits to ensure compliance and value. Transparency regarding specific deliverables and performance metrics would enhance accountability.

Related Government Programs

Aircraft Maintenance Services
Depot Level Maintenance
Aerospace Defense Contracts
Department of Homeland Security Aviation Programs
Lockheed Martin Government Contracts

Risk Flags

Sole-source award
Time and Materials contract type
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $45.4 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. PHASE DEPOT MAINTENANCE WITH CONCURRENT ENHANCED SPECIAL STRUCTURAL INSPECTION

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $45.4 million.

What is the period of performance?

Start: 2006-11-22. End: 2015-05-05.

What is the specific type of aircraft being serviced under this contract, and what is Lockheed Martin's unique qualification for this specialized maintenance?

The provided data does not specify the exact type of aircraft serviced under this contract, nor does it detail Lockheed Martin's unique qualifications beyond their general status as a major aerospace contractor. The contract description mentions 'PHASE DEPOT MAINTENANCE WITH CONCURRENT ENHANCED SPECIAL STRUCTURAL INSPECTION,' which implies complex, high-level servicing. Typically, sole-source awards for such specialized work are justified by factors like proprietary technical data, unique tooling, specific engineering expertise directly tied to the aircraft's design and manufacturing, or existing support infrastructure that cannot be replicated by competitors within the required timeframe. Without this specific information, it's difficult to fully validate the necessity of a sole-source award from a technical standpoint.

How does the average annual cost of $5 million for this contract compare to industry benchmarks for similar aircraft depot maintenance and inspection services?

Determining a precise industry benchmark for this contract's average annual cost of approximately $5 million is challenging without knowing the specific aircraft type, age, complexity, and the scope of 'enhanced special structural inspection.' Depot maintenance for large, specialized aircraft can range significantly, from a few hundred thousand dollars for routine checks to several million for extensive overhauls. Given that this is a sole-source, Time and Materials contract awarded to a major defense contractor over a long period, the $5 million annual average could be considered fair if it covers highly complex, critical maintenance on sophisticated platforms. However, the lack of competition and the T&M structure mean there's a heightened risk that this cost could be higher than a competitively bid fixed-price contract might achieve.

What are the primary risks associated with the Time and Materials (T&M) contract type in this context, and what oversight mechanisms are in place to mitigate them?

The primary risk with a Time and Materials (T&M) contract is the potential for cost overruns, as the government pays for the actual labor hours and material costs incurred by the contractor, plus a fee. Without robust oversight, contractors may lack sufficient incentive to control costs or complete work efficiently. For this contract, mitigation would rely heavily on stringent government oversight, including detailed tracking of all labor hours, verification of material costs, review of subcontractor invoices, and clear definition of 'completion' for tasks. The government contracting officer and technical representatives must actively manage the contract, ensuring that all work is necessary, authorized, and performed efficiently. Regular audits and performance reviews are also critical.

Given the contract's duration of nearly nine years, what is the potential for technological obsolescence or changes in operational requirements impacting its value?

A contract duration of nearly nine years presents a significant risk of technological obsolescence and evolving operational requirements. Aircraft technology, maintenance procedures, and the specific needs of U.S. Customs and Border Protection (CBP) can change substantially over such a long period. If the contract is not structured with flexibility, the government might end up paying for outdated maintenance techniques or services that are no longer aligned with CBP's mission. Mitigation strategies could include incorporating periodic reviews, options for contract modification based on new technologies or requirements, or break clauses. However, the current data does not indicate such flexibility, suggesting a potential risk to long-term value.

What is the historical spending pattern for similar aircraft depot maintenance and inspection services by the Department of Homeland Security or CBP?

The provided data does not include historical spending patterns for similar services by DHS or CBP. To assess this contract's context, one would need to analyze past contracts for aircraft depot maintenance and inspection, noting the number of competitors, contract types (fixed-price vs. T&M), durations, and final awarded values. Understanding historical spending would help determine if the $45.4 million award is consistent with previous investments, if costs have escalated, or if this represents a new or expanded requirement. Without this comparative data, it's difficult to gauge whether this specific award represents a prudent use of taxpayer funds relative to past expenditures.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: AEROSPACE CRAFT LAUNCHING, LANDING, GROUND HANDLING AND SERVICING EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 244 TERMINAL RD, GREENVILLE, SC, 29605

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $45,434,605

Exercised Options: $45,434,605

Current Obligation: $45,434,605

Timeline